Despite a 3.2% decline in the Stock Exchange of Thailand (SET) index within the year's first two months, foreign investment rebounded in February, coinciding with reduced expectations that the Federal Reserve will only cut interest rates three times in 2024.
Soraphol Tulayasathien, SET's senior executive vice-president, confirmed the return of foreign funds in February, mirroring trends in regional markets. Nonetheless, an economic growth forecast downgrade by the National Economic and Social Development Council, projecting 2.2-3.2% for 2024, has cast a shadow on the market's future.
By the end of February, the SET index rose slightly by 0.5% from January to 1,370.67 points but is still down 3.2% since the close of 2023.
Soraphol noted positive export growth and a resurgence in tourism as positive influences on the market, with analysts upgrading profit forecasts for related companies, resulting in some stock prices recovering.
Despite the upbeat trend, analysts advise investors to focus on high dividend stocks for reliable returns amidst continued local and global economic uncertainty. These stocks have typically offered better returns than the broader market and are considered less risky.
Trading on the SET and its alternative market decreased by 29.5% in February to an average of 47.2 billion baht per day ($1.32 billion) compared to last year, with foreign investors buying a net of 3.25 billion baht in February despite an overall net sale of 27.6 billion baht from January to February. Their activity has topped other investor types for 22 months in a row.
The SET's forward price-earnings (P/E) ratio sat at 14.3 times by February's end, higher than the Asian market average of 12.9 times, with a historical P/E ratio of 16.3, exceeding the Asian average of 15.3 times. The dividend yield was 3.31%, surpassing the Asian average of 3.19%.
Thailand Futures Exchange (TFEX) trading volume in February averaged 393,850 contracts daily, down 2.6% from January and a 25.6% year-on-year drop for the first two months, standing at 399,395 contracts.
In terms of financial results, SET-listed companies reported a 2.6% decrease in total sales to 17.2 trillion baht ($496 billion) last year, with net profits falling 10.7% to 961 billion baht.
Factors contributing to these declines include reduced commodity prices, such as oil, agricultural products, and food, accompanied by increased SG&A expenses and sustained high-interest rates, according to Manpong Senanarong, another senior SET executive vice-president.
On a positive note, tourism-linked sectors like aviation, hotels, retail, and telecommunications saw a rebound thanks to government initiatives.